The Upaid suit of $1 billion against Satyam for forgery is one of the major legal liabilities that prospective buyers are currently assessing. What exactly is the Upaid case all about?

Upaid is a privately-held company registered in the British Virgin Islands for which Satyam Enterprise Solutions, a subsidiary of Satyam Computer, executed a project for developing software for mobile prepaid technology. The project was executed between 1997 and 2002 for which Satyam got $10 million, partly in shares due to Upaid’s inability to pay cash.

Soon after, Upaid wished to patent the technology for which the software coding was done by Satyam. For this, they needed the signatures of the 20 Satyam employees who worked on the project. Satyam helped Upaid get these signatures though some of those employees had by then moved out of the company.

Armed with the patent, Upaid, filed a suit against Qualcomm and Verizon Wireless in 2005, alleging that they were using the patented technology. However, one of the original Satyam employees who had worked on the Upaid project had moved to Verizon by then. He pointed out that the signature that was supposedly his on the patent application was a forged one. Upaid was forced to retreat after this revelation. In 2007 it filed a suit against Satyam accusing it of forgery and fraud.

A top official of Satyam Computer, according to a news report, said that the company’s US lawyers had advised it that Upaid’s case was weak on at least two counts. For one, Satyam had not benefited nor was it likely to be a beneficiary of Upaid’s patent. At best, it was an IT service provider that helped write the software for a fee of $10 million and had nothing to do with the patent itself. Second, Upaid has not earned any money from its patents till now and a $1-billion damages claim was highly exaggerated.

The Upaid case is likely to come up for hearing in a Texas court in June. The official said that the prospective buyers have been provided complete information on the case, including the opinion of Satyam’s US lawyers.